HomeFinanceGeneral Motors raises full-year guidance, announces deeper cost-cutting - UnlistedNews

General Motors raises full-year guidance, announces deeper cost-cutting – UnlistedNews

Mary Barra, CEO, GM on NYSE, November 17, 2022.

Source: NYSE

DETROIT— general motors is raising its 2023 guidance for the second time this year after the automaker reported Tuesday that second-quarter results were up sharply year-over-year.

The Detroit automaker also said it is ramping up cost-cutting measures through next year and now plans to cut $3 billion in spending compared to previous guidance of $2 billion.

GM Chief Financial Officer Paul Jacobson said the cuts will include sales and marketing expenses, salaried employment and other costs.

This is what GM reported for your second trimester:

  • Adjusted earnings per share: $1.91. (This is not comparable to the $1.85 analysts were expecting due to one-time items.)
  • Revenue: $44.75 billion vs. $42.64 billion expected, based on Refinitiv Consensus Estimates

GM’s gains included an unexpected charge of $792 million for new business agreements between GM and LG Electronics and LG Energy Solution. The cost is the result of the automaker sharing costs with the companies for the recall of its Chevrolet Bolt EV models in recent years, which LG companies were previously expected to pay.

Taking that and other one-time items into account, the company reported adjusted earnings before interest and taxes of $3.23 billion, or $1.91 per share.

Unadjusted, the company reported net income attributable to shareholders of $2.57 billion, or $1.83 per share, up nearly 52% from a year earlier, when it earned $1.69 billion, or $1.14 per share.

Revenue for the quarter increased 25% compared to $35.76 billion a year earlier.

For the full year, GM is raising its adjusted earnings expectations to a range of $12 billion and $14 billion, from a previous range of $11 billion to $13 billion. GM also raised expectations for adjusted automotive free cash flow to a range of $7 billion and $9 billion, up from $5.5 billion and $7.5 billion, and for net income attributable to shareholders from $9.3 billion to $10.7 billion, compared with the previous outlook of $8.4 billion to $9.9 billion.

Jacobson said the increase is the result of stronger than expected prices, demand and capital discipline.

However, the increased guidance depends on GM successfully negotiating new labor agreements with the United Auto Workers and Canadian Unifor unions this year without a work stoppage or strike. The UAW has a new leadership that has publicly been far more confrontational than previous union leaders. Current contracts covering approximately 150,000 union workers for Detroit automakers will expire on September 14.

“We have a long history of negotiating fair contracts with both unions that reward our employees and support the long-term success of our business. Our goal this time will be no different,” GM Chief Executive Mary Barra said in a statement Tuesday. shareholder letter. “That’s the best possible outcome for all of our key stakeholders, including our team, plant communities, distributors, suppliers and investors.”

A work stoppage would add to the auto industry’s years-old production woes as a result of the coronavirus pandemic and major supply chain constraints such as semiconductor chips.

For GM specifically, a work stoppage could cost hundreds of millions of dollars a week and delay ramping up production of its new electric vehicles, which the automaker has already been slow to produce. Jacobson said GM achieved North American production of 50,000 EVs in the first half of the year, but he acknowledged that “it’s been a bit challenging.”

He said the automaker will reveal more about the slow production of its new electric vehicles during an analyst call on Tuesday.

Before reporting the results Tuesday, GM’s earnings beat expectations 86% of the time, according to Bespoke. However, the stock only averages a 0.17% gain on earnings day.

GM shares are up about 16% this year. They closed Monday at $39.30 a share, up from a 52-week high of $43.63 a share, hit in February.

This story is unfolding. Please check for updates.

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Sara Marcus
Sara Marcushttps://unlistednews.com
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